Secrets of sourcing success in the passenger shipping industry

Decision makers tasked with food and beverage sourcing explain to Bill Becken how they tackle trends, costs, fluctuating demand and other challenges

Secrets of sourcing success in the passenger shipping industry
A bread display in the Windjammer restaurant on Royal Caribbean International's Quantum of the Seas
This article was first published in the Autumn/Winter 2015 issue of International Cruise & Ferry Review.

Procuring food and beverages to be consumed onboard cruise ships is one of the most difficult areas of work in the trade. The competitive pressure to innovate in terms of menus and offerings is intense.

In addition, along the supply and logistics chains involved, there are many potential points of failure – from farm, plant or store to shore; from shore to ship; and from galley to table. Not to mention that any guest can request anything at any time – enlarging the potential scope of F&B sourcing efforts.

Many of the new trends impacting F&B sourcing today – such as ‘farm-to-table’ cuisine and using fresh ingredients – are inspired by land-based evolution and revolutions in lifestyles, dining and cuisine, especially among those with discretionary income adequate for lengthy travel.

“With greater health awareness, guests are seeking more fresh food selections,” says Ozer Balli, vice president of Hotel Operations for Disney Cruise Line and president of the Marine Hotel Association. “So we have partnered with suppliers globally that can deliver goods at the highest level of freshness. We identify the most effective shipping process to ensure that freshness is not sacrificed. Across all four Disney cruise ships, guests can enjoy fresh fish, never-frozen meat options – such as Miyazaki Japanese Beef – and fresh dairy products.”

Similar trends prevail at Royal Caribbean Cruises Ltd. (RCCL), with some variations among the six brands (Royal Caribbean International, Celebrity Cruises, Azamara Club Cruises, Pullmantur Cruises, Croisieres de France, and TUI Cruises).

“Of course our customers are becoming more concerned about wellness and how dietary choices may impact their health,” says Tom Wieland, director, Supply Chain F&B Procurement, Asia for RCCL. “We’ve seen a steady rise in requests for gluten-free, sugar-free, vegan and vegetarian offerings, which our culinary teams are duly providing onboard. RCCL is also committed to the elimination of trans fats in the ingredients used onboard.”

Developing closely in step with these trends is sustainability for onboard F&B products and services. Balli points out that, as part of an overall Walt Disney Parks and Resorts company-wide initiative, “Disney Cruise Line is working towards being fully sustainable by 2020 with all seafood products.” And he adds that the company “continues to be committed to reducing waste and recycling whenever possible.”

He points in particular to the line’s handling of used cooking oil. “Each week, more than 1,000 gallons of used cooking oil from our galleys is offloaded and recycled. One hundred per cent of the offloaded cooking oil is recycled in ports of call around the world, including Vancouver, Miami and Port Canaveral.” The line’s land-based partner in the Bahamas – Bahamas Waste Management, Nassau – converts the offloaded cooking oil into biodiesel fuel to power a fleet of local vehicles.

As to F&B sustainability efforts at RCCL, Wieland says these involve “managing and minimising the negative economic, environmental and social impacts associated with the sourcing of goods and services; while maximising positive impacts wherever possible.”

He says he has seen some changes in attitudes in recent years. “Our guests and investors are becoming more educated about the benefits of sustainability within the supply chain. They expect companies to be developing a strategy as well as tangible measures to monitor progress. We are looking at many areas within hotel/F&B sourcing and services where RCCL can make a sustainable difference – seafood, coffee, and toilet/facial tissue, just to name a few.”

A third trend changing the nature of F&B operations is local sourcing and offering options like slow food and artisanal food/beverages. In this realm, Disney Cruise Line’s small size is just one of its several advantages: “The guests’ culinary experience is an integral part of our creativity and storytelling,” says Balli. “Part of the Disney Cruise Line experience and difference is our ability to immerse our guests in the destination experience, while remaining mindful of their wants and expectations.

“We partner with approved, in-market suppliers that meet Disney’s food and health standards to offer guests regionally-inspired items on the menus and buffet stations. In Hawaii, produce and dairy products are supplied locally. When the Disney Wonder sails to Alaska, we purchase fresh salmon, halibut and other seafood selections from a local, approved seafood supplier. Kegs of local craft beer are delivered to the ship from a local brewing company in Juneau. We also work with local suppliers to order products that guests can easily identify with, like butter or cereal wrapped in a European label – all to create a regionally inspired atmosphere in the dining areas.”

Wieland says of the brands he is responsible for: “RCCL strives to source locally whenever possible, and as is economically feasible. Our supply chain philosophy focuses on achieving the lowest total cost of ownership. This mandates that we balance the quality, service and price of these goods to achieve the highest value possible. Freight storage, handling and delivery costs are all taken into consideration before making procurement decisions.” He adds:

“Clearly, as culinary cuisine is continuously refined to meet guest expectations, sourcing locally becomes more and more important. For instance, Chinese cuisine in the US is quite different than the authentic Chinese cuisine you experience in the markets of such places as Shanghai or Tianjin. Beverage preferences can be guided by local expectations as well.”

The two entities have quite distinct approaches to maximising F&B economies of scale without sacrificing quality, thereby protecting their business models.

Disney Cruise Line, despite its small fleet, actually brandishes a big stick in this regard as part of its mammoth parent. “To take advantage of economies of scale and for greater flexibility,” says Balli, “we synergise with Walt Disney Parks & Resorts to source F&B products. Our sourcing model has evolved to purchasing items seasonally and quality is never sacrificed for price.”

The tack taken by RCCL on economies of scale, says Wieland, goes beyond leveraging its great fleetwide buying power and global network of food and beverage suppliers. For starters, the global company is tracking any new purchasing options as it expands its itineraries and deployments in Asia, a growth market.

“Shrimp and seafood are prime examples of items that can be procured in Asia and distributed globally to our fleet,” says Wieland. “With the emergence of China as a major growth opportunity for the cruise industry, we are exploring the many opportunities that exist in that market to secure the volumes of goods necessary to support our fleet and business model.”

Wherever the cruise lines are sourcing their products, finding trustworthy suppliers is critical. “Above all, quality must be consistent across all four Disney Cruise Line ships and destinations,” says Balli. “We pride ourselves on delivering a product that meets if not exceeds the expectations of our guests. Our suppliers must deliver on this Disney standard regardless of itinerary or where the ship may disembark from.

“Disney Cruise Line partners with suppliers from around the world that understand such expectations and fully meet our requirements,” he says. “All suppliers must go through the same comprehensive evaluation process, meet strict food and safety regulations, comply with Disney policies and procedures, conduct routine third-party inspections and maintain proper insurance documentation.”

As part of its supplier management system, RCCL maintains a policy manual that covers issues such as supplier diversity, registration and evaluation, supplier inactivation and deactivation and verification to ensure vendors operate in compliance with policies and meet state, international, and local regulations.

“Initial supplier approval is supported by the Equifax assessment tool,” notes Wieland. “We conduct business reviews with key suppliers throughout the year to exchange feedback about operational effectiveness and opportunities for improvements. This fosters a good working relationship and an ongoing open dialogue. We hold a periodic supplier conference, where best practices and the industry’s experience can be shared among our diverse set of F&B suppliers. In 2014, we also created a document – Supplier Guiding Principles – to help our suppliers understand and adhere to RCCL’s expectations and standards.”

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Bill Becken
By Bill Becken
Monday, December 21, 2015